Barrie Hayes CEO

Challenging Office products Markets over the last 5 years & Changing

Traditional Office products The traditional areas of Paper / IT consumables/ Stationery Last 2 years continue to decline:- Paper - 2 to 5% decline EOS -3% (switching to MPS) Stationery - 3 to 7% decline Paper 15-20% of sales EOS % of sales Filing 5-10% of sales Areas that are commoditised and suffering decline / change of purchase

2013 GDP stagnant 2014 across 28 countries = 1.4% Euro markets € = 1.1% Fastest growth 3 Baltic countries 4.4% German growth 1.7% Modest growth in Spain / Italy <1% Non Euro markets:- –Sweden 2.8% –UK 2.2% Unemployment expected to 12.2% in Eurozone. In Europe as a whole dip from 11.1% to 11.0% Market trends – GDP

The last 5 years has seen major change:- Big box players – Staples focus on Direct delivery and E Commerce (not stores), expanding range 1m sku’s – OD/OMax merge –Antalis & Xerox – Lyreco expanding non - traditional products model –Wholesale - creation of Adveo –New entrants web players Amazon / Shoplet $100m online with huge ranges 250,000 sku’s Consolidation and diversification

Retail model is challenged within Europe. New partnerships being made. Manufacturers will continue to consolidate Convergence of traditional channels –(web is a driving force) Manufacturer > Wholesaler > Reseller > User Manufacturer Reseller Wholesaler User Consolidation and diversification

Margin pressure Margins have dropped with the commoditisation of volume products and fast web pricing awareness. Web entrants have made it more visible and price sensitive particularly in the SME sector. Customers are more aware of the market due to web / smart phones. Key in office supplies in Google – 104m results Its been difficult to pass on increases with low inflation.

Change is here and inevitable Are you selling office supplies ? Or Supplies/Services to the office ? Selling only office supplies will mean a dealer contraction as the web has commoditised this.

Category development (Adjacencies) Trends are moving from office supplies companies to Business Service Providers & have been happening for the last 5 years. Europe has been slow to react. Main areas of development:- JanSan – Janitorial and disposables Coffee & Break room – Coffee solutions /catering items MPS – Managed Print Services – major profit provider Promotional products – Overprinted /Marketing

Category development (Adjacencies)

Coffee & Break room services - Office coffee market growing at 15-20% p.a - Disposable coffee consumables. - Full line service/ support offer - Coffee is a growth market - Sometimes more important than paper choice - Other break room products - Adds value to the AOV

Category development (Adjacencies) MPS – Manage Print Services Being offered in SME Complete service machines / toners and paper Growth market and good margin generator Single software option to branded manufacturer

Like a Rubiks cube………………… Connecting with the customer – Success is profiling Data & mining Age profile Gen X / Baby boomers Millenials Contact type Web/direct /retail Category offering Customer type Large / SME Logistics offering Technology Your touch point marketing strategy

Success is 3 dimensional Speed of change is crucial Albert Einstein said: “To keep doing the same thing and expecting a different result is the definition of madness” Office product companies need to evolve

What do you offer ? –Products /services Who is it for? –Target market What problem are you solving for them? How do you do it distinctively – USP’s What is your promise? –Understand yours and how you meet their needs Evolve or go out of business What do we need to ask ourselves ?